News and Events

How Office 365 is Bringing Back Microsoft’s Mojo

Microsoft received ample criticism for its “Lost Decade” spanning 2000-2010 when it ceded leadership in search to Google, in consumer devices to Apple and in web services to Amazon – all while its stock price remained flat. While the company had some bright spots – it tripled revenue to $65B and doubled net income to $19B – it’s undeniable that huge opportunities were missed.

Fast forward to recent developments. In the past 9 months Microsoft’s stock is up 30% – more than the S&P 500, Google and Amazon. New CEO Satya Nadella and his focus on making Microsoft a mobile and cloud-first company have been well received. Office for iPad, Windows Phone 8.1 and Surface 3 have recently launched – with many more products in the pipeline. Earnings strength continues with positive overall results for Q3 FY14 posted in April. Cloud services are gaining strength: Azure is making inroads against Amazon Web Services, and Office 365 has caught fire with impressive salesacross all market segments.

Let’s now look more closely at Office 365 – and the ways it’s helping bring back Microsoft’s mojo. Sales of Exchange and SharePoint used to be dependent on customer willingness to install or upgrade on premise servers. With Office 365 these workloads generate recurring per-subscriber revenue while Microsoft routinely upgrades the servers under its own management. Further, revenue from the Office rich client suite (Word, PowerPoint, Excel, etc.) was often tied to 3-year PC refresh cycles. Today Office 365 offers plans to organizations that also include the Office rich client suite on a subscription basis – removing the dependency on PC upgrades. In short, one big reason Office 365 is great for Microsoft is the fact that it removes dependencies that traditionally stalled sales.

Let’s now look at market reception. Office 365 is selling brisklyas organizations are increasingly moving email, collaboration portals, file sharing and other personal productivity workloads to trusted cloud vendors in order to focus on more strategic IT initiatives. Organizations also appreciate the tax and cash flow advantages of moving the costs of these workloads from up-front capital expenditures to recurring operating expenses.

The value customers are receiving from Office 365 is reflected in the numbers. In the three years since its launch Office 365 has become the fastest growing business in Microsoft history and is now on an annual revenue run rate of $2.5 billion. Quarterly financial results reported in April 2014 for Office 365 showed year-over-year revenue growth of 100% and nearly a doubling of commercial user subscriptions.

In fact, Office 365 has been selling so effectively that Microsoft’s sales teams carry goals not just for new subscriber sales but also for customer deployments – to address a backlog of customers that have not yet deployed it to end users.

This is where Centrify comes in. As our CEO Tom Kemp has blogged, Centrify offers an easy-to-deploy, Microsoft-validated solution for Active Directory-based single sign-on, user provisioning and mobile management – enabling single sign-on for Office 365 and more than 2,500 other SaaS apps. Want to learn more? Visit the Centrify for the Office 365 landing page or register to attend one of the webinars listed below.

Office 365 is clearly on a roll and will continue to grow in importance for Microsoft over the long term. Centrify is looking forward to partnering further with Microsoft to drive the continued success of our mutual customers.

Centrify CEO Tom Kemp, an industry expert in security and infrastructure software, discusses market and technology issues around the disruption occurring in the Identity and Access Management market due to the cloud, mobile and consumerization of IT trends occurring in today's IT environment.